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Market Recap – January 22, 2024

Keel Point

January 22, 2024

Last Friday’s report of the big jump in consumer sentiment to its highest level since mid-2021 reflects the positive reaction to the continuing decline in inflation and growth in stock prices.  The S&P and Dow Jones both reached new record highs last week.

  • The jump in the University of Michigan headline index by more than 28% to 78.8, brought it to its highest level since mid-2021. There were big improvements in both the current conditions and expectations indices, which were “supported by confidence that inflation has turned a corner”.
  • The most visible drivers of consumer sentiment typically are gasoline prices – which have fallen regularly since October – and stock market performance, which has been generally positive since October before reaching new highs this past week.
  • The direct relationship between consumer confidence and consumer spending is not always so clear, but we see consumer spending and retail sales – better than expected this past week — still strong as excess household savings are mostly spent, and consumer debt and delinquencies are increasing.

  • The S&P 500 closed 1.2% higher on Friday with semiconductors leading the gains, up 3.9% on Friday and 7.9% for the week.
  • With positive contributions from semiconductors and homebuilders, Keel Point Satellite Equity gained 1.8% over the past month compared to the all-country-world-index (ACWI) being up 0.5%.
  • 2024 is expected to see roughly 11% earnings per share (EPS) growth, with growing expectations for similar EPS growth in 2025.
  • “Almost always in the past, when the Fed has been cutting rates, profits were faltering. The so-called soft landing that occurred in 1995 was a notable exception, when the central bank cut its target rate even as S&P 500 earnings grew. The index rose 34% that year, which remains its single best annual performance since 1958.” (Wall Street Journal)

 

Disclosure:  Securities offered through Keel Point Capital, LLC, Member FINRA and SPIC.  Brokerage and Investment Advisory Services are offered under the Keel Point brand. Investment Advisory Services offered by Keel Point, LLC, an affiliate of Keel Point Capital, LLC. While reasonable efforts have been made to provide data from sources considered to be reliable, no guarantee of accuracy is given. Keel Point does not give tax, accounting, regulatory, or legal advice to its clients.

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